An Employer's Eye View

There are many popular conceptions of the labor market for
entry-level work in the big cities, and of the labor market
problems of inner-city workers, whose unemployment rates remain
stubbornly high. One frequent refrain is that employers require
new skills, driven in large part by computers
and computer-related technology, and that urban minority workers,
whose education is lacking, are being left out of the new
economy. A contrasting and often voiced theme is that
anyone who really wants to work can find a job.

Are inner-city workers being left behind, without work,
because they lack the skills for the jobs available in the
information age? Or are they left behind because jobs have
left the cities? Are employers stuck with a labor pool that
is unequipped to do todays jobs? Or are there jobs out
there for anyone who truly wants to work?

In this article, we look specifically at the labor market
for entry-level jobs in metropolitan areas. Our study is based
on extensive information gathered from employers. The Multi-City
Study of Urban Inequality, funded by the Russell Sage Foundation
and the Rockefeller Foundation and conducted from 1992 to
1996, included telephone surveys of several thousand managers
in the Atlanta, Boston, Detroit, and Los Angeles urban areas,
followed by several hundred face-to-face interviews. Researchers
asked employers questions about the skills they require, the
tasks they need done, and how and where they recruit workers
for entry-level positions. Employers were also asked what
they think of the city as a place to do business, and how
they view the labor pool for these jobs. Their responses allow
us to look at the operation of the urban labor market and
assess the validity of popular images.

We find that skill and geographic barriers put even entry-level
jobs out of reach of many inner-city workers  though
the skills involved are typically far from high tech. But
theres more to the story. Employers assessments
of the skills of potential workers are often influenced by
stereotype and bias. If employer perceptions result in missed
hiring opportunities among workers who would otherwise make
good employees, then both workers and firms are losing out.

SKILLS AND CREDENTIALS

The past 20 years have been difficult for lower-skilled
and less-educated workers, as opportunities and incomes have
shrunk during much of that time. The role of computers in
driving up skill requirements has particularly captured the
public imagination, as personal computers have invaded many
areas of work. But how significant are the skill requirements
for entry-level jobs? To find out, we and our colleagues asked
employers about the tasks they want entry-level workers to
perform.

Their responses tell a sobering story. Half of all entry-level
jobs in our survey required workers to talk to customers,
read instructions of at least a paragraph, do arithmetic,
or work with computers every day. With the exception of computer
use, this is true for all occupational groups, even the lowest-paid
category of job  service workers. Harry Holzer, who
directed the studys telephone survey and is now Chief
Economist for the U.S. Department of Labor, has found that
the frequency with which these tasks are used is even higher
in the central city, as compared to the suburbs and other
smaller cities within the metro area.

Employers are also looking for fairly significant credentials
for entry-level workers. A high school diploma is required
for approximately two-thirds to three-quarters of the available
jobs; general or specific experience is sought for about the
same fraction. In the city of Boston, for example, 80 percent
of entry-level jobs require a high school diploma, 78 percent
require general experience, and 81 percent call for references.

This new emphasis on credentials and hard skills,
such as reading and math, seems to have arisen for several
reasons. Some employers mentioned new equipment and safety
standards in the use of hazardous materials, and new programs
that require worker involvement in quality control, all of
which can require reading written instructions or keeping
written records. Employers also spoke of the need for workers
to handle a broader range of tasks, and to possess a more
analytical view of how their job fits into the big picture.
Secretaries, for instance, are no longer typists but information
managers. And a variety of industry-specific changes
call for added skills: for example, according to the director
of a Boston agency, home care aides need added technical knowledge
because managed care is inducing hospitals to discharge sicker
patients.

At the same time, computer use in entry-level jobs rarely
involves rocket science. It takes about ten minutes
to train file clerks to use the computers, one manager reported.
A human resources director at a bank commented that she doesnt
look for computer familiarity in new hires because all
systems are different. In some cases, computers have
actually reduced skill requirements. Most retailers commented
that smart cash registers have made the cashiers
job easier. A data entry supervisor at a consulting firm noted
that computers have become easier to use.

Less expected was employers emphasis on soft
skills, such as the ability to communicate and work
with others. In face-to-face interviews, increased demand
for soft skills was mentioned more frequently than any of
the hard skills, except computer use. Many employers related
this to a competitive strategy to win over customers 
to make their businesses a fun place to shop and to
work, in the words of one retailer. Managers of retail,
service, and clerical workers spoke of the increased need
for the skills involved in customer service. Its
becoming more and more important that people have good communication
skills and (that) theyre people-oriented. Even
in a consumer goods factory, the human resources director
said that he needs someone who is more customer-oriented
 meaning someone who is motivated to think about the
quality the customer seeks. The increased use of teams and
broader interaction across the organization also appears to
be a factor.

Thus, the hurdle for entry-level jobs, especially in central
cities, appears to be high. Fewer than 6 percent of jobs required
no reading, writing, arithmetic, talking to customers, or
use of a computer. Fewer than 5 percent of employers were
willing to hire workers with no high school diploma, other
training or experience, or references. Whereas the average
hourly wage for all entry-level jobs was $8.72, those that
required none of the above-mentioned tasks or credentials
paid $6.88 and $5.87 per hour, respectively.

And this situation is likely to worsen. About 40 percent
of all employers reported an increase in the level of skills
required on an entry-level job (with very few expecting any
decrease). Basic reading, writing, and math skills were cited
most frequently; close behind were social and verbal skills,
or a combination of both. Clearly, employers want workers
with cognitive and personal skills to handle daily tasks,
even for entry-level jobs. And this need is even more pronounced
in the central city, where a great many minority and less-educated
workers reside.

LOCATION OF THE FIRM

Most urban labor markets, including Boston, face the problem
of having more potential workers than jobs. Although the number
of job vacancies is typically higher in central cities than
in other parts of the metro area, the number of unemployed
workers and their unemployment rate are higher as well. Furthermore,
suburban commuters take a significant number of available
jobs. Thus, the effective level of unemployment (accounting
for the size of the labor force and commuting patterns) tends
to be highest in central cities.

This problem has been exacerbated by the relocation patterns
of firms. In all parts of the metro area, firms we surveyed
have an average tenure that is fairly high. Still, about 44
percent have moved in the past ten years. Moves out of the
primary central city  to either suburbs or smaller cities
in the metro area  totaled 22 percent of firms that
were located there ten years ago. This is far more common
than the reverse move; only 1 percent of businesses outside
the central city moved in. Even though central cities represent
only a minority of metro area businesses (ranging from 20
percent of businesses in Boston to 45 percent in Atlanta),
the result is a strong net flow of relocating businesses away
from these main cities.

Employers most commonly expressed concern about urban
locations was that the fear of crime and violence in their
area would deter customers and employees. A Boston public-sector
manager from an inner-city neighborhood noted that he had
a hard time getting people to work if they were not from the
minority community. You read the newspaper, and you
hear this one gets shot, and that one gets shot through the
window, and the bus, and the car, and whatever. . . .
However, some urban employers protested that their neighborhoods
reputation for crime far exceeds the reality.
Interestingly, suburban employers were more concerned about
inner-city crime than their central city counterparts, suggesting
that such fears may be prone to media-fueled exaggeration.

Employers also expressed concern about the quality of the
inner-city workforce, with 60 percent voicing negative views
in the face-to-face interviews. Many spoke of the lack of
hard skills such as reading and writing; also of concern (but
mentioned less frequently) were negative evaluations of soft
skills or character. In all four cities, employers linked
the problems to race, but more often to class and culture.
Yet, evaluations of the skills of urban and suburban workers
were far from monolithic. Many asserted that there was no
difference between urban and suburban workers; 21 percent
painted inner-city workers as a better workforce in
some ways  more likely, perhaps, to be available for
work, and more content and committed workers in menial or
low-paid jobs.

Most firms that had moved out of the city gave reasons that
have little to do with perceptions of neighborhoods. They
cited the need for more space, lower rent, or lower taxes;
the desire to consolidate scattered operations after downsizing;
or the need for better access to transportation. But about
one in seven of those moving or planning a move did raise
inner-city issues in explaining the firms
decision to move; all of those mentioned crime or related
issues such as vandalism and a few also cited the quality
of the workforce.

Finally, what of inner-city-based businesses that choose
not to move? First, smaller businesses and those tied to local
clienteles (such as local merchants or community banks) do
not have relocation as an option. Second, employers such as
universities, government agencies, and nonprofits have a strong
commitment to their locations. Third, some low-wage or environmentally
harmful industries found inner-cities workforces and
sites advantageous; for example, a penal institution was one
of the few firms moving to an inner-city location. This reminds
us that such moves can sometimes be a mixed blessing.

RECRUITING AND SCREENING

One potential source of dysfunction in urban labor markets
is firms recruiting and screening practices. If practices
rely too heavily on word-of-mouth among closed social networks
or are geographically limited in scope, firms may miss finding
and hiring qualified workers, especially blacks and other
minorities. We asked firms how they recruited the last entry-level
person hired, and about screening methods used in the hiring
process.

Recruiting practices for entry-level jobs are pretty basic.
Employers reported that newspaper ads and referrals from current
employees each generated about 25 percent of new hires; referrals
from acquaintances produced 14 percent; another 14 percent
were filled after an applicant walked in off the street. Most
of the rest were referred by an employment service, school,
or union, or applied after seeing a help wanted sign. For
screening, most firms use a written application and an interview.
About half use some form of testing. City employers used methods
roughly similar to those in other parts of the metro area.

The prevalence of informal recruiting, particularly referrals
from friends and current employees (almost 40 percent of hires
in our sample), tends to favor those who are connected to
the incumbent workforce and work to the disadvantage of those
who are geographically or socially isolated. Even firms that
officially rely on formal methods often end up hiring via
informal networks because managers find this easier and more
reliable. One manager for a public agency that advertises
job openings widely and uses employment agencies noted that
dispatcher jobs are, nonetheless, typically filled by informal
means. Somebody who is a [current employee will] say,
Gee, I worked with, I know this kid. . . . We
find that the informal . . . network is quite often the best,
the best way to go.

Thus, generating a more open hiring process and a more representative
workforce may require supplementing informal channels with
formal ones. A human resources specialist from a national
retail chain indicated that informal methods make up the bulk
of their recruiting but do not generate sufficient black applicants
for company goals. So they advertise to increase the flow
of black applicants. Its not cost-efficient, actually,
to advertise in the newspaper, she notes. The
reason we advertise in the black newspaper is because I have
a hard time drawing in people who are qualified from that
area. Thats actually the only reason. . . .

Whether consciously or not, employers may also be limiting
their scope by focusing their efforts at particular neighborhoods.
Few described active measures to avoid hiring workers from
particular geographic areas, since doing so may risk violating
antidiscrimination laws. However, when asked if they target
particular neighborhoods for hiring workers, only 55 percent
said never. But when asked if they avoid particular
neighborhoods, 90 percent replied never, even
though targeting some neighborhoods may imply avoiding others.

The use of preemployment interviews may increase the subjectivity
involved in hiring decisions, especially when screening for
soft skills, as some employers noted. One director of human
resources characterized interviews as a personal evaluation
. . . a gut feeling. This may result in missed opportunities
to hire otherwise qualified applicants, particularly minority
candidates. An Atlanta greeting card store manager offered
an interesting account of his own experience. He began by
stating that black applicants do not know how to apply for
a job. They dont know how to dress, he said.
They dont ask about the job. They dont seem
interested. They dont show up on a timely basis.
But, moments later, he noted that many of these poor
applicants were in fact qualified for the jobs. Theyre
fine once they get the training. I maybe sound like Im
putting the young black kids down, but the group we have right
here  they were all greenhorns then, and theyre
very good right now.

EMPLOYER ATTITUDES

Employer attitudes about racial and ethnic groups ineluctably
infiltrate hiring decisions. Some negative perceptions surely
stem from actual average skill differences, but bias clearly
plays a part as well. Audit studies that sent out job applicants
with identical qualifications have found that employers chose
white and Anglo applicants more often than black and Latino
ones.

Our survey asked employers about whether customers, employees,
or other employers in the industry prefer to deal with people
of their own race or ethnicity. Overall, almost one-quarter
of employers think that customers, employees, or other employers
would prefer to deal with people of the same race or ethnicity.
These results are fairly similar across cities.

Another less direct indicator of employer attitudes is the
ratio of new hires to applicants by racial, ethnic, and gender
group. Firms in our survey hired a greater proportion of white
applicants than of black male, black female, and Latino applicants.
In almost every instance, the ratios of hires to applicants
are smallest for black males, and in several instances the
difference between the ratio for black males and other groups
is startling. Some of these differences no doubt result from
differing qualifications in the applicant pools. But the divergence
between central city and suburban employers in our sample
raises some questions. For compared to their urban counterparts,
suburban firms hire a smaller proportion of black male and
female applicants. This contrast is striking because urban
jobs require (on average) higher levels of skill and qualifications
than jobs in the suburbs. As blacks have lower levels of credentials,
education, and test scores than whites (on average), we would
expect the hiring ratios of blacks to be higher in the suburbs.

When asked about racial or ethnic differences in skill or
worker quality, the largest group of respondents consisted
of those who answered I dont know (sometimes
citing the fact that their workforce is too segregated to
assess different groups) or I dont see any differences.
Some of these attitudes appear to be sincere; others may have
been offered as the socially acceptable answer. When employers
did note black/white or Latino/Anglo differences, they touched
on many of the same issues that arose about inner-city workers.
One common view was that blacks and Latinos have less command
of hard skills, such as reading, writing, and math. Many attributed
these skill differences to educational attainment or school
quality.

Employers criticisms of blacks hard skills often
shaded over into discussions of soft skills  for example,
the claim that many African-Americans dont know how
to apply for a job or present a professional image. And here
some of the views expressed clearly fall into the category
of stereotypes. Standard stereotypes about black hostility
and oversensitivity abounded. Many employers opined that black
workers have a chip on their shoulder or feel
like theyre owed; these phrases came up recurrently.
Another recurrent stereotype depicted blacks as lazy or unmotivated.
But other employers see black workers (and even more commonly
Latino and Asian immigrants) as needing the job, and therefore
more willing to work hard, do menial tasks, and stay at a
job longer. A few viewed black workers assertiveness
as understandable or even positive.

The persistence of stereotypes is distressing, particularly
given rising skill requirements for entry-level jobs. Though
skills shortfalls in African-American and Latino populations
represent a real and serious problem, their labor market outcomes
may suffer, in part, because of employer perceptions (and
misperceptions) of the hard and soft skills of different racial
and ethnic groups. It is particularly difficult to distinguish
between legitimate, skill-based screening and discrimination,
when soft or social skills are involved. Moreover, the combination
of informal recruiting and screening methods, which are prone
to subjectivity, and the rising demand for soft skills, where
assessment is hard to free entirely from cultural differences,
stereotypes, and prejudice, presents something of a double
whammy for inner-city workers, particularly workers of color.

CLOSING THE GAP

Our findings do not paint a rosy picture of the market for
entry-level jobs in urban labor markets. Returning to the
questions we posed at the beginning of the article, it is
clear that there are not jobs for all who want to work,
in large part because of jobs rising skill demands.

On the other hand, skill barriers facing inner-city workers
pertain more to basic skills than to information-age expertise.
Moreover, the skills mismatch is only one hurdle among several.
Lower-skill jobs continue to filter to the suburbs, driven
primarily by available space or low rents, but at least in
some small part by fears and concerns about crime and the
inner-city workforce. Informal recruiting methods, stereotyping,
and bias may also contribute to a failure to hire potentially
successful candidates, especially minorities.

Such multiple hurdles call for multiple responses. Upgrading
the basic education that inner-city youth receive is a top
priority. Strengthening and supplementing public transit systems
can help workers reach the suburbs where lower-skill jobs
are growing. Diversity training for managers can help them
to see beyond stereotypes, recruit more widely, and successfully
manage a diverse workforce.

The current, low-unemployment labor market presents an important
opportunity to help employers who are now scrambling to find
workers, including inner-city residents of color who previously
have been relatively low on the hiring queue. Indeed, businesses
are dramatically expanding their hiring and in-house training
of less-educated inner-city workers, even prison parolees.
Education and training policy can capitalize on our current
tight labor markets by boosting our efforts to improve the
basic and the soft skills that employers indicate they need.
Rather than becoming complacent about the temporary upsurge
in jobs or bemoaning the labor shortage, now is a critical
time to invest in training, nurture new recruiting networks,
and challenge old stereotypes. Although our interviews date
back to a time when unemployment rates were higher, they make
a compelling case that the gaps in the structure of job opportunities
for inner-city workers are profound. Todays strong labor
market will not completely erase such barriers, but it offers
a real chance to begin breaking them down.

THE TASKS REQUIRED
AND...

% of entry-level
jobs that require worker to:

Daily

Weekly

Monthly

Almost
Never

Talk face to face
with customers

58

7

2

32

Talk on phone with
customers

53

7

2

37

Read instructions

54

21

7

18

Write paragraphs

31

17

10

43

Do arithmetic

65

12

4

19

Use computers

51

5

3

41

Rows
may not add up to 100 because of rounding

...THE
CREDENTIALS EMPLOYERS WANT IN ENTRY-LEVEL JOBS

% of entry-level
jobs that require:

Central City

Suburbs

A l l F o u r
M e t r o A r e a s

High school diploma

75

70

General experience

73

68

Specific experience

67

59

References

73

72

Vocational or other
training

42

39

B
o s t o n

High school diploma

80

75

General experience

78

71

Specific experience

69

58

References

81

81

Vocational or other
training

43

44

HOW
EMPLOYERS RECRUIT AND SCREEN NEW WORKERS

The last entry-level
worker hired (in percent) through:

Central City

Suburbs

Newpaper ad

24

29

Help wanted sign

4

5

Walk-in

14

14

Referral from

Current employees

26

25

Acquaintances and others

14

14

Employment services, community agencies

14

9

School

3

5

Union

1

1

Rows may not
add up to 100 because of rounding

Entry-level jobs
(in percent) that screen applicants by:

Central City

Suburbs

Written application

79

82

Interview

88

88

Skills test

50

40

Verify education

35

25

Check criminal record

32

29

Source:
Multi-City Study of Urban Inequality

EMPLOYERS'
BELIEFS ABOUT RACIAL AND ETHNIC PREFERENCES

% of employers who
say that:

Central City

Suburbs

A l l F o u r
M e t r o A r e a s

Their customers
prefer to deal with employees of their own race or ethnic
group

23

19

Their employees
prefer to deal with employees of their own race or ethnic
group

28

22

Other employers
in the industry prefer employees of their own race or
ethnic group

25

21

Any one of the three
above

37

30

B o s t o n

Their customers
prefer to deal with employees of their own race or ethnic
group

21

18

Their employees
prefer to deal with employees of their own race or ethnic
group

27

18

Other employers
in the industry prefer employees of their own race or
ethnic group

24

20

Any one of the three
above

38

28

Source: Multi-City
Study of Urban Inequality

HOW HIRING
MATCHES UP WITH JOB APPLICANTS

Ratio of firms' last hires to applicants
for:

Central City

Suburbs

A l l F o u r
M e t r o A r e a s

Black males

.62

.51

Black females

.89

.68

Hispanic

1.01

1.12

White and other

1.18

1.09

B o s t o n

Black males

.55

.58

Black females

.59

.41

Hispanic

1.12

1.09

Asians

.62

.60

White and other

1.15

1.00

Note:
Ratio is percentage of hires by race or ethnicity and
gender divided by the percentage of applicants by race
or ethnicity and gender. Asians are omitted from the upper
panel because the small population in Detroit and Atlanta
makes the data unreliable. The ratios for Los Angeles
are 1.12 (central city) and 0.79 (suburbs).
Source: Multi-City Study of Urban Inequality

Philip Moss and
Chris Tilly are Professors in the Department of Regional Economic
and Social Development at the University of Massachusetts,
Lowell. Their book, Stories Employers Tell: Race, Skill,
and Hiring in America, will be published by the Russell
Sage Foundation in the fall of 2000.